China has ambitious goals for developing and deploying electric vehicles (EV). The stated intention is to "leapfrog" the auto industries of other countries and seize the emerging EV market. Since 2009, policies have included generous subsidies for consumers in certain locations, as well as strong pressure on local governments to purchase EVs. Yet four years into the program, progress has fallen far short of the intended targets. China has only about 40,000 EVs on the road, of which roughly 80% are public fleet vehicles such as buses and sanitation vehicles. China’s EV industry faces the same challenges as companies in the West: a) high battery costs; b) inadequate range between charges; and c) no obvious infrastructure model for vehicle charging.
China has ambitious goals for developing and deploying electric vehicles (EV). The stated intention is to "leapfrog" the auto industries of other countries and seize the emerging EV market. Since 2009, policies have included generous subsidies for consumers in certain locations, as well as strong pressure on local governments to purchase EVs. Yet four years into the program, progress has fallen far short of the intended targets. China has only about 40,000 EVs on the road, of which roughly 80% are public fleet vehicles such as buses and sanitation vehicles.
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China's EV industry faces the same challenges as companies in the West: a) high battery costs; b) inadequate range between charges; and c) no obvious infrastructure model for vehicle charging.
In addition, China's industry is constrained by four domestic barriers.
China's fragmented automobile industry lacks the capacity to acquire or develop world-class EV technologies. To date, attempts to induce foreign companies to transfer technologies via joint ventures have been largely unsuccessful.
Trade barriers prevent foreign firms from producing or selling EVs in China. Not only are imported cars ineligible for subsidies, there are also stringent IP transfer requirements for domestic sales of foreign-branded EVs and other "new energy vehicles." Equally important as the international barriers, trade barriers at the city- and province-level prevent an efficient allocation of the EV manufacturing and supply chain within China.
A visitor looks at an e6 electric taxi of BYD during the 11th China International Battery, Raw Material, Producing Equipment and Battery Parts Fair, also known as Battery China 2013, in Beijing, China, 17 June 2013. Credit Belfer Center.
Read more at Belfer Center.
